For folks who have built their own business from the ground up, the prospect of selling it is oftentimes difficult to consider. For other people, selling it off may have been the point from the beginning.
But no matter what the case, sometimes you will find yourself asking, “How do I sell my business fast?”
The idea may seem overwhelming at first, especially if this is your first time selling a business. Whether its the timing of the sale itself or the overall logistics of the transaction, there are a number of factors to consider before you hang the “For Sale” sign on the front door.
Fortunately, there are a number of steps you can take to make the process as pain-free as possible.
Why Sell Your Business?
There are as many reasons for selling a business as there are leaves in a tree. Whether you’re feeling overworked, preparing for retirement, or just ready for the next chapter of your life, selling your business can be the culmination of a lot of hard work and dedication.
Some reasons that you want to sell your company might include:
- A new opportunity
- Family obligations
- Health concerns
- Business decline
Whatever the reason, getting through the process as quickly as possible will help alleviate some of the anxiety in the process. So, without any further ado, let’s dig into the process.
Steps Of Selling
1. Determine Your Business’ Worth
Generally speaking, a business is worth a multiple of its profit. What that multiple is can vary.
Smaller deals will generally generate 2 to 3-times profit, while medium deals will bring in 3 to 5-times profit, and large deals can garner as much as 5 to 10-times profit.
EBITDA is a popular measure for determining the valuation of a business, though it isn’t always accurate.
If you’ve kept accurate and current records for the life of your business, this process will go much smoother, allowing the buyer to review your financials in less time.
It’s important to make sure your records apply with generally accepted accounting standards so that your financial statements can be compared with similar companies.
2. Find A Good Broker
If you’re wondering how to sell a business quickly, one of your strongest assets will be a reputable business broker.
A business broker is similar to a real estate broker. They help you list your business for sale, make sure you have all the pertinent information, and help you find qualified buyers. Brokers will also help you consider the state of the market and economy when making a sale.
The broker will help you get a current valuation for your business, develop a marketing plan, and help with other aspects of the sale.
Of course, brokers are working for a percentage of the sale price so as the seller, it’s in their best interest to get you a good price.
Ultimately, a good broker will serve as an advisor for the whole business selling process. And if you’re looking to sell your business fast, a qualified broker will help guide you through the process.
3. Create A Marketing Plan
A good marketing plan should serve as a valuable resource to any buyer interested in your company.
The buyer will want to see your ongoing plans for increasing brand awareness and any strategy you’ve developed that helps set your services apart from the competition.
You should be able to explain your system for generating leads and driving sales, as well as potential growth opportunities in demographic segments and local geography.
Your marketing plan should help buyers feel confident that the business can continue to grow after they sign the check.
4. Market Your Business To Potential Buyers
Qualified buyers may be retired executives who are looking to purchase a company, they may be a competitor, or they could be a private equity firm looking for a solid investment. Each of these buyers will have different reasons for buying your company.
Finding pre-qualified buyers can help immensely with the buying process. You should be looking for multiple offers at the same time. Not all offers are legitimate and selling your business requires that you disclose sensitive information about your company. Depending on your business, this could be worth a lot of money to your competition.
It’s entirely possible that one of your competitors could make an offer just to have a look at your financials. So be careful about who you hand your information to.
The type of buyer will determine how long the process takes, but the whole selling process usually take between 6 and 8 months to complete. Individual backers will need an SBA-backed loan which can take up to 90 days to be approved. If you’re selling to a private equity firm, it can usually finance the deal on its own.
Whatever the case, don’t accept the first offer that comes across your desk. It may help you to get a better price by leveraging one deal against another giving you more value for you company.
5. Finalize Contracts and Legal Documents
After finding a qualified buyer and accepting their offer, you can finalize the deal. This is often the most harrowing part of the seller’s journey. If you’re open to it, a trusted attorney can handle most of the requirements at this stage, which will move things along faster.
A few of the standard contracts and legal documents you will encounter at this point in the process include:
- Noncompete agreements
- Asset listings
- Purchase agreement
- Bill of sale
- Security agreement
It’s entirely possible to create your own purchase agreement and contracts, but it’s generally not advised. It’s common for laymen to miss crucial information that can leave them vulnerable to bad actors or unexpected circumstances. After all, these contracts will often be more than 50 pages long.
If your attorney isn’t an expert in contract law, they should be able to refer you to someone who is.
Once everything is written up, you can sign the document and the sale is complete.
How To Sell My Business Fast: Tips and Advice
The process outlined above generally covers each step you’ll need to follow in order to sell your business, but there are certain steps you can take ahead of time to make your company a more attractive acquisition target.
Increase Your Sales
Even for those looking to sell their business quickly, the process takes time. Often times, business owners will become so focused on selling their company that they forget that they need to run the actual business.
As the owner, you still need to do your job and come to work every day, working to grow the business.
Strong sales will help you increase your company’s valuation and make it more attractive to buyers. However, if things decline or stagnant as a result of the sale taking too much of your time, that could be a red flag to any interested party.
Having good employees who know how to do the work even when you’re unavailable goes a long way to mitigating this risk. Meanwhile, trust in your broker, accountant, and lawyer to do their jobs.
Create An Exit Strategy
Any business owner with even an idea of selling their company should have a well-defined exit strategy. The best of these strategies are created well before the decision to sell the business is actually made.
If you don’t have a well-defined exit strategy, this may not be the best time to sell the company.
Having an effective exit strategy is good practice at any point in a business. It will help ensure that you’re not forced to take less for your company than it’s actually worth in the event that an emergency forces you to sell.
Selling your company can be an emotional experience. After all, you’ve built this thing from the ground up yourself.
Entrepreneurs tend to have a huge sense of pride in their business and what they’ve accomplished. But even if that is the case, it’s imperative that you don’t let your emotions impact the deal.
Buyers aren’t worried about how much of your blood, sweat, and tears you’ve put into the business. All they’re worried about is the bottom line. So, if an offer seems low or unfair, it’s your prerogative to turn it down.
In other cases, your competition may be interested in buying the company and come to you with a fair offer. Don’t let past rivalries get in the way of closing a great deal.
Make Sure You Get Paid
You may encounter a situation where the buyer seems perfect and they have a great offer, but they don’t have the funding to pay you right away.
You should walk away from this. Or better yet, avoid it entirely and make sure the terms of the deal demand payment upfront.
If a buyer does say they want to pay you over a period of time, make sure the terms are well defined and be prepared to take legal action if they renege on any part of the deal. Any legal fees incurred in this situation may be an additional cost to you, so be aware of that before you agree to any installment payments.
You’ve built up your business. You’ve created value, memories, and jobs. But sometimes, the best decision for your life and family is to sell the business and walk away.
Don’t overcomplicate the process. Find qualified professionals–like attorneys, accountants, and brokers–to help you with each step of the process. While this may cost you some money, it’s hard to put a price on peace of mind.
If you’re looking to sell your business quickly, you should be prepared for each step of the process. Prepare important documents ahead of time, make sure you have an exit strategy, and be patient.
Even if you’re looking to unload the company hastily, you should be prepared to wait. Finding a good deal for your company shouldn’t be rushed.
Have realistic expectations about the terms of the deal, the price, and the timeframe.
In some cases, you may need to postpone the sale until you can raise your revenues and get your financials in order. But if the company is doing well and continues to generate profits, it should be relatively easy to attract qualified buyers.
Whatever the case, selling your business is a big decision that shouldn’t be taken lightly or hastily. Put the work in, hire the right people, and be patient.